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Bank's technologies for small business


EBRD-Business Day, Riga, 20 May 2000 Presentation of the Russian Federation

Bank’s technologies for small business

    1. Joint Stock Commercial Bank “Center-invest” (has General Licence of Central Bank of Russia #2225) has the experience of 3 years (1996-1998) of auditing according to the international accounting standards (IAS) (PriceWaterhouseCoopers). Auditing for the year 1999 will be performed in July 2000.

    2. Usually small businesses are not the desirable clients for the banks. However if such an enterprise is a client of an auditing, leasing, insurance company, security agency and training firm in the same time so there appear an opportunity of reducing the prices for the services of each company. “Center-invest” has formed such an infrastructure in a strict accordance with the Russian legislation. If 150 small enterprises make use of the services of the such infrastructure, as a result each firm successfully passes by break-even-point. At the present time 3,000 small enterprises are the clients of the bank. Therefore the bank is interested in its clients’ development and in providing them with a wide range of services.

    3. Any crisis contains a potential for accelerating growth. In November 1998 the bank has already arranged for its clients a seminar devoted to the strategy of the aggressive marketing after the crisis. As a result some clients managed to capture 30% of the regional market.

    4. In January 1999 an imputed earnings tax was put into operation for the small enterprises. The auditing firm “Center-audit” helped to put the scales of business of the bank’s clients in conformity with the new rules. According to the proposals of the auditors some alterations were introduced into the regional tax rates.

    5. In December 1999 a new company “Center-Internet” was established, which provides the small companies with the technologically new and advanced services. As an example: following the enquiry of a bank’s client, with the help of the internet technologies, within a month a foreign partner was found, a contract was signed, the delivery of the goods was provided, and also customs clearance and the realisation of the goods were performed.

    6. At the present time the project “Small business of the South of Russia” is elaborated together with the Ministry of Economics of Russian Federation and Black Sea Trade and Development Bank. The calculations showed that to be able to satisfy the surplus payable demand of the population in the South of Russia the investments of 500 min. US doll. will be needed. This figure represents a potential for the development of 8,800 small enterprises.

    7. To be able to serve even a part of these enterprises a further development of banking sector in the region is vitally needed. The project “The foreign bank advancement to the Rostov region”, which was calculated in January 1999, demonstrated the possibility of payback on investments into a regional bank within a year.

Professor V. Vysokov, Ph.D. in economics, Vice-president of CB “Center-invest” (Rostov-on-Don)(E-mail: vysokov@centrinvest.ru)